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Google PodcastsNihal Mehta of Eniac Ventures joins Nick to discuss The Human Rolodex, How the 2021 VC Vintage will Perform, and the Importance of Partnership Dynamics. In this episode we cover:
- How do you think about active management of relationships over time? Do you have any advice, tricks, or tips?
- What is something you would have told yourself when you started Eniac?
- How have you built the team over time and thought about roles, responsibilities, skill sets required, and driving value/outcomes for the firm?
- What do you look for in a fund manager?
- Where do 2020 and 2021 Vintage Funds rank?
- What inspired you to start the 100K Pledge?
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The host of The Full Ratchet is Nick Moran, General Partner of New Stack Ventures, a venture capital firm committed to investing in the exceptions.
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0:18
Nihal Mehta joins us today from New York City. Nihal is the founding GP of Eniac Ventures, a leading seed investor. He’s also the co founder of the 100K Pledge and the Help Main Street Initiative. Nihal, Welcome to the show.
0:33
Thanks for having me, Nick.
0:35
So your your nickname is the Human Rolodex. How did you come by that?
0:40
Well, first of all, most people don’t know what a Rolodex is. So they’re looking up, you know, people are googling right now. Rolodex, what is a Rolodex? You know, I’m a social guy, like my ENFP. You know, I was a DJ and party promoter, the social chair of my fraternity in college. So along my career just developed a knack for, you know, growing relationships. And it started when I was an entrepreneur, running companies, selling to customers, pitching investors, and, you know, the world is small, if you can keep up with people, these relationships can grow over decades. And so I think that’s kind of the core of it. But it’s what I live on, as is our network.
1:23
So Nihal, I see that in your background here, you were a co-major in computer science, as well as philosophy. I can’t imagine there were too many other classmates that overlapped in those two disciplines. Can you talk a bit about your background in in academics and how that led you to the world of startups?
1:42
It was a really nice overlap. You know, it did that, you know, late 90s, there was actually a concentration at that time it was artificial intelligence was the overlap in philosophy and computer science. And so that was kind of my concentration undergrad. And of course, I didn’t realize you know, how powerful that would be even 20, 30 years later. But yeah, it was it was a great dual degree that I pursued.
2:05
Yeah, so what happened after school? And you know, how did that lead to the ultimate founding of Eniac?
2:11
After school, my first startup went bankrupt. Sound effects and enter sound effects here. I started a company with my roommate, senior year. Like I mentioned, I was a DJ. Previously, my roommate and I were playing parties in West Philly. And folks were like, What are you playing? What are the other hot things going on? We started an email list. Like, hey, there’s these things called .com, like the internet interwebs worldwide web for this buddy an accent. But let’s throw up a .com and we stopped sending emails and people can come to the website and they can see what’s happening in the city. So that was the birth of a website called Phillytonight.com. We launched in 1999 is actually my senior thesis, my computer science philosophy senior thesis, his senior thesis, my roommate senior thesis, I forget what he majored in. He had the five year plan, by the way, which means you took five years to graduate. But anyway, we launched this site, we raised a bunch of money in like five paychecks. So we cobbled together like 205k checks basically like a million dollars from like, uncles and aunties that we’re very proud to invest in. That’s already brownie that’s on duck. Oh, honey, now expect them? Yeah, it you know, it was for sure is real money. And we spent it really well. We spent it really well and really fast. We spent it in about two years. We had billboards on 95. We had commercials on MTV. Wow, that’s, that’s something else that somebody’s looking at right now afterwards a Rolodex what is MTV? And you know, we had like the roots beatboxing like Phillytonight.com I have these video, audio files still. Anyway, we spent the money really well. We ran out of money 2001 every .com back then was was not making tons of money making any money. And the goal was to get page views hits to your website, not even page views to then raise the next round of funding. Of course, the market fell apart in 2000. And after 9/11 nobody could raise money for these coms that were not revenue generating. There was a.com bubble had burst. And so we were left with half a million bucks of debt on our balance sheet. And no additional investors to solicit to raise more capital no revenue. Actually, we had 10 grand or revenue for making like some random uncle a website totally unrelated to our business. And so we had no no choice but to file chapter seven. You know, that was probably the most humiliating business event of my career. How old me at this point, Nihal? Yeah. 2001 I was 24 years old. So early 20s But we are the pride and joy of the Indian community in Even American community, you know, and then all of a sudden of going bankrupt and so that Diwali party, sorry, Indian New Year, at that party, that Auntie in the corner was like, don’t talk to those kids if for bankruptcy, you know. There’s a bad Indian accent again. But anyway, yeah, you know, it was a very humiliating, embarrassing humbling moment, looking back, it was the best moment of my career, building a company, taking it all the way up to billboards and commercials and 50 people on staff, taking it all the way down, back to me and my co founder, Vijay, and then having to file for bankruptcy, you know, incredibly humiliating, but when you get back up, you shake yourself off, you’ve looked failure in the eyes, you’ve overcome it. And I didn’t realize it then. But I realized it now that that event may be relatively invincible, that I felt like the worst thing in business basically happened to me and I can now just Garner upside from here. And that’s what I did. I bought back the asset. I moved to California, I started a company called IPs. With the assets I gave the investors in Philly tonight, five times the equity niche. After they got a chance to write off the investment after bankruptcy. That company became a mobile marketing engine helping brands reach customers over text message. And after five years that was acquired by Omnicom, which is public at that time, still is now large ad agency in New York and moved to New York and oh, five, but that was a very long journey taught me everything I know about entrepreneurship. And I, I recommend that entrepreneurs fail very quickly, I don’t necessarily recommend bankruptcy. And I don’t recommend failing quickly after now, we have given you a check. But I recommend that you fail very quickly out of the gate, because the learnings on failures are 100x, those successes. And that’s, you know, one of my core learnings from my very first startup,
7:03
You were ahead of your time with the text message marketing business.
7:09
Oh yeah, you know, that kind of, it was actually a part of the senior thesis for Phillytonight in 1999, which was, we can use SMTP gateways of carriers to convert emails to text messages on people’s phones. By the way, at that time, carriers were not interoperable over SMS, which means AT&T, I think it was called singular back then I couldn’t text from singular to Verizon, like, carriers can talk back and forth over SMS. And so we actually built a map of what phones belong to what carriers This is also before number portability, so you can take your phone number across carrier, get to change your phone number if you want to change your carrier. So we had a map, a static map that we were just constantly learning against by just sending emails, if emails were bounced, we would take it off the database. And I think we’re the largest map probably at that time in the country. And so anyway, the initial use case of SMS was you could give me your phone number at Phillytonight.com, select the genre of music that you liked, we would actually text you. So say it’s like hip hop putting your phone number, we would text you the hip hop event that we recommend that night to your that’s pretty cool. Which was pretty cool. Turns out consumers wouldn’t pay for it though. But turns out brands paid for it. Turns out with ads we had customers like Madonna, we started with artists, Nelly Jay Z. And then we made our way to the brands, where the budgets were McDonald’s, Master foods Pfizer to reach customers over text at this point in time, by the way interoperability existed that was apt in 2001, portability existed, there was a shortcode that came into play in 2003 that enabled you to text in to interact with brands. So we powered things like texting to vote for American Idol, and those sort of campaigns. And that was a big inflection point. That was a big inflection point in the company. And that’s one of the reasons why Omnicom wanted to buy us. Interestingly enough, by the way, fast forward 16 years to 2021. After we got acquired, one of our best investments at Eniac is a company called Attentive, we led the seed and attentive in 2015, that business publicly recently valued, and the price has changed since then. But the last public valuation of this company is 8 billion, you know, we led the seed in this company, and essentially, they’re powering SMS for retailers for E commerce, merchants, and it’s going gangbusters. So you know, SMS has just grown from there.
9:42
So what was one of the you mentioned a bunch of learnings from the failure, but I imagine there was some around monetization and business model. Give us you know, some of the key key lessons that were not repeated later.
9:56
Oh, yeah, I mean, the great thing about failure is that like whether you’re conscious Have it or not, you very rarely make the same mistakes, like you have this muscle memory and scar tissue, that literally your body does not let you do the same mistakes, you know. And so we made so many mistakes affiliate tonight. You know, one was our monetization model, by the way was, you know, online advertising. And so the merchants of nightlife bars, clubs, restaurants would would pay us some sort of subscriber fee for us to drive traffic to their websites and, and ultimately convert to customers. Now, this is pre Google. So we can plug into an ad network, and just monetize right? Pretty Yep, we can plug into another, you know, SMB ad network and monetize. So we literally had to hire like the biggest people we could find, and big buy like muscle mass, to walk into bars and clubs and shake down the owners for cash. Because these people did not want to pay us. You know, it was like a gangster business in West Philly. Like, this is a true story. And by the way, this is before even SMBs were using credit cards to pay their bills, this is a way before SAS. So like, you got to go in there and get cash and get out before you got shot. Know that we never really know, we tried to shoot at us. But anyway, you know, lesson, one lesson from that is like, make sure your business model has potential to scale. Like outside of like hiring people, big muscles, make sure you can plug into a market like, you know, Google ad network or something else to scale beyond your existing Salesforce. And so that was one lesson for another lesson is we hired like, you know, there’s this old, when your early 20s, you’re like, oh, and you know, investors like Oh, you shouldn’t invest in a, you know, gray hair, or no hair kind of leader on your team. And we actually found a, through a recruiter, like found a CEO. And he had been at like Time Warner for like 10 years. And he was super nice guy. But of course, I negotiated a crazy big package. And he left Time Warner to like be at this cool startup. And there’s our CEO, but he didn’t do anything. You know, he just burn, burn money. Big, big corporate guys usually don’t don’t tend to mix with small Igel startups. So that was another, you know, that was another learning. And then also don’t spend a lot of money on billboards. Billboards even back then weren’t cool, they’re not cool. Now, they weren’t cool, then they don’t kind of never be cool. So anyway, we have so many learnings, and still deriving a lot of learnings. The biggest learning though, is learning grit, and resilience. And that you think that as a founder, that this is it for you, this is the end of your career, you went bankrupt, you do something else in your life, life is long. And it’s about getting up and dusting yourself off. And now we look at founders in a very different way. Because we look for founders, from the investor perspective, that have failed before, or that had built a company before and they have that muscle memory. You know, sure we invest in a lot of first time founders, but the serial founders that especially have had some crazy experience before in their life, they have a chip on their shoulder, they can see around corners. And we really value that. And that comes from that grit and that resilience. And I think the fact that I experienced that firsthand, and also my co founders of Eniac had similar experiences. Not only gives us like the empathy, and compassion to relate to other founders, but like, the first person identity, you know, with that, and I think that makes all the difference as an investor. And that was, that was probably my biggest takeaway is that it’s not the end of the world. Keep on going. And it’s actually the time horizon is longer than you think. And you’re gonna outlast other folks, you’re gonna win. It’s just a matter of time.
14:06
Yeah, I’ve got an associate on the team here, who founded a successful company, had success with it, and then joined us here at the firm. And I think he’s 26. And he was telling me the other day, he’s like, I wish I would have started in venture capital. When I was younger, I feel like I would be so much further along. It’s just like, you know, look at your history here. You’ve had success founding a company and you’re still so young, you’ve got so much room to run in front of you. Yeah. So yeah, life is is long and each experiences is contributing to the way you approach everything and the successes,
14:46
The dots to connect backwards, you know, using various Steve Jobs in quote, but like, the next moment is just a combination of every other moment you’ve had, right. And so that’s absolutely right. Every experience somehow is part of your part. who you are. And the more you can leverage every single experience, big experience you’ve had, the more unique of an impact you’re going to have on the world, you know, for what you do next.
15:11
So I’m not sure that this was next for you, but you launched Eniac, was it 12 years ago? Tell us a bit about the thesis at firm.
15:18
Yes. So, you know, after fast forward after a bunch of startups, you know, that was the first experience, then there was interest, and there’s buzz, and there’s our local response, we started angel investing off some of the successes actually, after EPS invested my first angel investment, a company called AdMob, it was acquired by Google and I got to see Sequoia and Excel. Jim gets at Sequoia who also did WhatsApp and excel rich Wong has become a close mentor operate. And, you know, as a founder, you’re like VC is these vulture capitalists, they’re gonna take my money and fire me, blah, blah, blah. There’s actually some good VCs and the ones that really dramatically can change the trajectory of your business much greater than you can that see much greater potential in you that you will ever see. And I got to see that firsthand from this investment and add Bob. And that was pretty inspiring. And started doing more angel investments. And then was close with three buddies, who also had similar experience coming up their startups, angel investing. And we’re like, let’s do this together. We have this unique kind of mobile software experience, building, selling or failing at Mobile startups. Why don’t we pull some money together and then start investing in mobile startups. And so our first fund was launched actually, 11 years ago, it was a massive fun, so big that you can’t even count the commerce $1.6 million.
16:47
Hey, more than you raise for your first startup, Nihal.
16:51
That’s right. That’s right. We’re making we’re making progress.
16:55
So are you still good at spending money? That’s the question.
16:57
You know, we spent this fun, a little bit more judiciously. We did 32 investments, we wanted to build it. Like purposely building a track record and a working history, the four of us, we wanted to act like this was a fun that was 100x bigger, you know, from a portfolio construction perspective, except the checks for like, 25k. It was funny actually making the same debates and the time that was put into decision for 25k Check. You know, we’re now making for $2 million check. In Eniac five. But yeah, so you know, that was it. That was the inspiration as the beginning now we were still coming off our startups, the fund was so small, we actually didn’t take any fees, our LP’s or friends and family and us. And this was just to see it was an experiment. And turns out that being mobile founders, we could attract other mobile founders. And we ended up backing some great ones out of the first fund. And we had some outstanding companies like Vungle, ginger vistar, Airbnb by virtue of acquisition analytics that, you know, that ended up putting that fund in a great spot. Two years later, we were able to raise from family offices and high net worth some more external capital. That was any activity that was a $12.9 million fund. And we actually have a couple IPOs. In that fund, we have one public company outlet, another one coming up next month. Because we have a valid, amazing, we have
18:24
a one year old, right? So I suspect you are as well.
18:28
That’s correct. Yep. And, you know, obviously, if you can actually, by the way, put capital behind companies that are that mission driven. That’s a complete win win. And so we have a bunch more, you know, over the years with similar missions to outlet that we just get even more motivated by. But anyway, fund three was a few years after that, that was a $55 million fund. That fund has the Attentive seed in it and pay and B actually has that funds doing quite well. We also see through the business called alloy out of that fund that was recently announced have a 1.3 5 billion post money valuation last week. That’s an API for KYC and AML for fintech. And so I think that’s probably our first institutional fund with institutional LPs. So these are like university endowments, for example, that invested in that fund and we’re very proud of the work in that fund because that was the that’s like a real right sized Seed Fund for that vintage 2014. And then we get a little bit bigger in 20 1700 million dollar fund for and then we just launched fund five this year at 125. We could definitely get a lot bigger. A lot of our cohort has I think we’ve been very deliberate and keeping the fund size small. Still in by small side, exactly still during pre product market fit at seed. Well of course to our pro rata in our company’s past seed, you know to maintain ownership but we will never enter it in a And we’ve said that since the beginning, you know, we are seed investors. Now the sector has changed. We started in mobile. By the time we got to fund three, we just mobile mobile was the mobile internet was the internet. And so we’re generalists now. But because we’re all engineers, we do have a Tech band. You know, we’re attracted to technology Moats. But we’re consumer, we’re enterprise. We’re dev tools. We’re frontier tech. We’re crypto now, or climate, we’re Gen Z. But one thing that ties us together is receive pre product market fit. And we’re all founders. And for better or worse, we can’t get away from rolling up our sleeves. And trying to help you know whether or not founders will let us help or want our help is one thing. But we’re, you know, we’re trying to help. And, you know, that’s the story. And that’s where we are today. And we’re just fortunate to have invested in, you know, 150 companies over the past 12 years, and hopefully another couple of dozen, you know, years to go, but having the time of our lives.
21:01
So now how if, if you could go back, you can’t go back. But if you could go back, what would you tell yourself? When you started Eniac?
21:09
I tell myself, this shits gonna take a lot longer than you thought. Pre chat, you know, yeah, that you’re not, you’re probably not even going to pay your salary from Eniac for six years. So had patience. Because the best companies still takes seven to 10 years to germinate. You know, in fact, even longer now, the best companies are staying private longer. And now we have, you know, 1000, unicorns, you know, private unicorns, as reported by CB insights earlier this week with 1000. Unicorns, that public markets, how the hell are they going to sustain 1000 IPOs you think over the next few years, probably not. So he’s coming, you’re gonna stay private, even longer. So anyway, the time horizon is not what you think that’s what I would have told myself. And the other thing, I think that we’re, we did a good job of are that you know, when you work with friends, because we’ve been friends since 1995, when we met freshman, sophomore year, don’t expect that’s going to translate into an amazing business relationship and amazing personal relationship and amazing business relationship are two totally separate things. Two totally separate things. And I think we recognized that about six years ago, and started working with a coach that really helped us understand how to work together professionally, when each of our superpowers are in a partnership, so that the firm, you know, it’s cliche, but it’s true, is greater than the sum of the parts, that I can lead with this scale from this partner. And they can trust me to do this job, for example. And so that’s been really helpful. And I think unless you really focus on a professional relationship with your co founders, you know, we’re big fans of coaches, you can’t really optimize the Mojo you have together. And so, you know, that was another learning. You know, I wish we actually wish we had a coach in 2010. You know, fortunately, we started using in 2015, I think 2016, six years in, so we’re able to definitely benefit from it. But I wish we got a coach earlier, though, you know, those are two things, I would have told myself.
23:19
How does that lesson extend to the team building, right, you’ve built now with five funds. You’ve got a nice group at Eniac, and how have you thought about roles, responsibilities, skill sets, cultural alignment, in ability to drive outcomes with each individual person’s superpower, right, that’s additive to the team, you know, how have you thought about building the team? And how do you think about talent? With regards to Eniac specifically, not not necessarily the startups?
23:50
I think, you know, you mentioned kind of a human Rolodex kind of quality of mine feature of mine superpower of mine, you know, and I think the firm uses that well, in terms of the network, like, for example, the network that I built, when we’re looking at a deal, we’ll just light up a lot of intros for diligence. And it’s very helpful to get that information very quickly. And then, of course, after we do an investment, those introductions can really help dramatically accelerate the growth of the company through business development, sales, corporate development, recruiting, and so on and so forth. You know, I think each of us has a superpower as great as that. Across the board, we call Tim, my partner, Tim the fixer. And so he’s the he’s the more conservative of us for, but he makes sure that we don’t do stupid shit. He’s constantly thinking about, you know, what a potential downside event is of us doing something. And like reminding us of the risks of certain deals or certain documents or certain partnerships, or whatever it is, and that’s a real necessary voice around the table on a partner Should Hadley we call him the innovator. He’s constantly iterating and innovating on our current processes. So he’s very process driven. You know, he runs the portfolio construction model, for example, which by the way, is a big part of venture capital. We never even know when we started. And see so passionate about it, by the way, he created a downloadable model, you can go to Eniac.vc to our blog section and download a portfolio construction model has been downloaded over 5000 times by other fund managers.
25:35
Yeah, guys are quite well known for it. It’s talked about and emerging VCs circles quite a bit.
25:41
There you go. You know, that’s Hadley, and Vic is he’s the frontiersman, he kind of creates brand new things out of nothing. And so he is constantly excited about autonomous robots, and obviously, crypto and things quantum computing, you know, he’s, he’s basically any crazy investment you see us do, you know, that’s Vic. And so that helps us think about new areas and new spaces and pushes our boundaries. Right. And you can tell that like Vic and Tim, the fixer, and like the Frontier has been, there’s always a little bit of tug of war between the two of them. But that’s what makes a great partnership, by the way. Our Myers Briggs, we got two extroverts, two introverts, two feelers, two perceivers. You know, it’s almost like perfectly aligned. Maybe some of that is because we’ve been working together and we figured out what domains to play in. But if you were to, like, create a fermata, scratch with four partners for Myers Briggs, like it would look like this, like, it’s almost like perfectly complementary. But you know, this is something we’ve put a lot of work. But now we own those titles, like we own those roles that we’ve kind of given ourselves, you know, and I’m constantly looking to make the network bigger and stronger for everybody. You know, Vic is constantly doing crazier and crazier deals. You know, we did two crypto deals last week that are definitely crazy. And so anyway, you know, it’s been working out and knock on wood, you know, we can keep growing the firm this way. So no
27:15
haul, we talk a lot on the show about how one selects winning founders. I know that you and your wife are active LPS as well and underrepresented fund managers. What are some of the similar or different characteristics you’re looking for in fund managers that you do in founders of Eniac investments?
27:36
Yeah, I think they’re very similar, right, which is, I don’t think you want to find any founder, right. Fund managers are essentially founders of their own startups, which is the firm Eniac is very much a startup you know, who have had some taste of failure before. So there is some grit and resilience and hustle embedded in them. I think you want to find somebody ideally, that has a co founder, there’s so many successful solid up so many successful so that ups we backed, but it’s hard. This startup that’s Eniac is still a roller coaster, like other startup. And while the highs of the highs and lows of the low, a little bit more tapered, because we have a lot of bets, versus one that accompanies, it’s still a roller coaster, and having somebody else to hug, to cry, to beat up to have 10 shots with followed by 10 beers with is very important. And so I think, co founders that are also equal, equal in ownership, and that have shared attribution, I think we really believe in the model of, you know, this is an Eniac investment, not a natal investment, not a Hadley investment. And we try to give founders kind of four partners for the price of one, you know, the whole firm for the price of one investment, that’s, by the way disruptive than a traditional VC model has been, but you know, that’s who we look for when at least when I’m retired, and making an LP investment in fund managers want to find somebody that’s failed before I do something is built a company before and failed, something that’s, you know, got to equal co founder. And VC investments we’re doing now are really, they were inspired by creating more diversity in tech, and kind of going up the waterfall, instead of obviously funding more diverse founders. Let’s also back and create more diverse managers, because more diverse managers are going to invest obviously, in more diverse founders, because they have different networks. Yep. And so that was a strategy when we started investing in funds, you know, years ago. And by the way, there’s so many incredible diverse managers now, that are not impact funds. These are real funds that are working making the investment like anybody else’s for for, for ROI. But you know, they’re doing great work. And almost every quarter now we’re finding, there’s so many funds, there’s too many to be able to invest in all of them. But it’s been really great to see.
30:16
You think that your pitch for Eniac has has evolved or changed at all, as a result of taking pitches from other funds?
30:24
That’s a good question. Yeah, I think so I think, you know, you’re, you always have to constantly learn, constantly curious, you know, somebody that just started a fund for the first time yesterday, believe it or not, you’re gonna learn a lot from them, as well, as somebody that is on there. 12 funded Excel. So I think, you know, mentorship is not and learning is not constrained by age or experience. I think you just have to put yourself in a position to receive and to learn. And you will learn. So yes, I think there’s a lot to learn, especially for managers of today. I’ve mean, the vectors of today, are are bigger than just saying on Twitter that like, three vectors in particular, each, I think we think is bigger than the entire mobile ecosystem by itself. I use mobile, because that’s kind of where we started. But crypto, climate, Gen Z, for example. Yeah. Each are massive. These are trillion dollar plus markets, and a manager that starts today that focuses on those things, you can learn a lot from them.
31:31
Yeah, it’s amazing, you know, what’s happened just in the past decade and a half in terms of large scaling markets that are accessible, and you can unlock, you know, those markets with technology. It’s incredible, you know, in light of that, my next question, I want to give you a multiple choice, but 2020 and 2021, vintage funds, three options, some of the best ever, some of the worst ever, or middle of the road, what’s your take?
32:01
Best Ever. And by the way, I was like, on the fence. I’ve been thinking about this a lot. And I was on the fence in the beginning. And actually one of my best friends, this incredible founder and investor. I’ve been trying to get into Eniac since the beginning 12 years. And he is passed on every month. On one pass, one to pass one, three, pass, one, four, pass fun five. I’m plowing it. Let’s go. And I’m like, what, like, why, like, why did this happen? You got some extra cash, like you bored. You want to hang out more? I mean, we can hang out. You don’t have to be you don’t have to invest? Hang out, just give me a call. No, this is going to be the fun. Why is this going to be the fun? Because I’ve done it? You know, we’ve done it four times before? Is this because this is like the or do like the number five? Why? Why is this one gonna be the fun? He said, Because COVID changed the world. And because everything is reimagined. And it’s not just Krypton climate, and Gen Z. It’s everything that we look at, we look at in a different light, that everything is being disrupted right now that the workweek is no longer five days in the office, that people are no longer taking flights for business that folks are not and haven’t been for a while go into stores to buy things. And we’re just seeing the beginnings of this disruption and this innovation and there are going to be so many founders that are going to out innovate all the incumbents to take advantage of this disruption and those founders are raising money now. And fun five is going to be able to give these founders money to not just disrupt the incumbents but to replace them. These multi 100 billion dollar market cap companies that have been around for a couple of decades. They’re toast and you’re gonna back the next Google and the next Apple and the next intercompany here Facebook post COVID with fun five so that’s fun to ever not not yeah, by the way we just launched in February we don’t have any temporary expectations exactly the temporary expectations but that’s fine never.
34:20
I mean, it’s kind of amazing. You know, you hear this is not binary, but you hear that often the most hyped rounds and the most frenzied startup rounds like you know that the big Facebook first round, those are the ones where everyone is like this is feels way overpriced and you know, way too much frenzy but those are the ones that you want to lean into. And I almost feel like the asset class itself is going through that right now. It’s like you know, there’s a big frenzy there’s more competition. There’s more money seed rounds are are inflating, but I can only imagine the exponential growth and scale of outcomes volume The outcomes and size of outcomes, five to seven years from now.
35:04
Yeah, that’s right. I mean, I think that’s why seed prices have gone up so much, right? And the supply of capital at seed is so much greater. Because they’re underwriting, you know, they’re adding another three zeros to where these companies end up. You know, they’re not, you know, historically, if you had a billion dollar outcome, a unicorn, you were made, you know, that was it, hang up your jersey, go buy a boat. Now, a unicorn is another unicorn, who cares. And so, you know, the seeds are being underwritten to at least quorums. And I think that’s changing the way that people are thinking about the entry price. That’s how they’re justifying the the new entry price, you know, yeah, you know, before it was like a 10. Post. Now, it’s a 20 posts, because this company could be a $10 billion company, not a $1 billion company. So I don’t believe all of that, by the way, I think we’re still very price sensitive and very disciplined. And I think our average pre money this year, of the 10 deals we’ve done is like, 9 million pre, you know, so we’ve been very disciplined, which we’re proud of. But we see a great deal. You know, the market right now for a great seed deal with traction in the valley is probably 50 posts, like no joke, a great deal with no traction, right? 30 posts, right? No joke. It’s crazy, crazy town. If obviously, it was something we love, we’ll obviously, you know, go after it. But yeah, the market feels very different right now than than it ever has.
36:41
The whole you’ve started in co founded several groups, one of which is the 100k Pledge. Why did you start it? And what is the 100k Pledge?
36:51
Yeah, I think, you know, all through my career, there’s been an element of service. And, you know, maybe that comes from being a son of an immigrant in this country and wanting to pay it forward to, you know, a great country that we live in, but also fighting for the underdog, and fighting for a lot of social justice that we believe needs to exist, and, you know, to help change a lot of the way that this country thinks and feels. And so the 100k Pledge is one of the outputs of that last summer, you know, the middle of COVID, you know, the world was outraged the country and the world was outraged. But with the murder of George Floyd, what happened in our industry was a lot of pledges that were being created to help with the economic empowerment of the black community. Certainly one of the root causes of racism, or economic disparity, say, in this country. And so we saw this before, you know, with Rodney King and Trayvon Martin, a lot of people kind of came out and said, I’m going to do this, you know, I’m going to pledge this to hire more from the black community, invest in the black community, donate to the black community. And obviously, there’s been a lot of great work. But there’s also been a lot of pledges that were lip service that folks talked about and never followed up on. And so myself and two other folks actually the same co founder from Philly tonight, one of our best friends Bijay and another bud parous. We said, Listen, why don’t we just spin up a simple website, that becomes a public social record of all these pledges, so that we can kind of create accountability and transparency for what people are pledging. And so if this organization is going to pledge a billion dollars in economic empowerment in the black community, let’s put it on the website and actually track their progress. And so we ended up spinning up this site is called 100k. Pledge calm, to first scrape existing pledges and track them. And then we’d a lot of people coming to us saying, hey, I want to make a pledge. can I register my pledge with you? And so you can pledge $100,000 Over the next 10 years, to for example, hire from the black community, invest in the black community, or donate to the black community. You don’t have to give us specifics or you can. And you can do that today. Right now. We’re tracking close to 50 billion in pledges. Wow, you’ll notice a progress bar under each pledge. And so you’re like kind of publicly shamed if you don’t make progress. So you got 10 years to make progress. So it’s a you know, it’s a long horizon, so don’t worry. But you know, we’re gonna be checking up on you guys. You know, we’re going to be checking up on especially the big corporations that made multi billion dollar commitments to maybe artificially inflate their stock price or help their broker or their brand. You know, we’re gonna make sure you follow through on these promises. And so that, you know, that was the inspiration. It was kind of a very high ROI web project, you know, took us like a weekend to build. And, you know, we have the domain for at least 10 years, already paid for it. So we’ll be tracking you. So yeah, that’s a little bit on 100 Get pledge, very proud of that project. Something else by the way, we launched right after COVID was held mainstreet.com. Similarly, we found a lot of restaurants, a lot of entrepreneurs were really hitting tough times. And the best way to help out restaurants at that time was to buy a gift card. It’s the best kind of no interest loan for these entrepreneurs for these owners. But there was no like gift card destination that existed. The grip cards are highly fragmented, once we dug into it. And there was not a website that enabled you to search across all restaurants across all the different gift card platforms. So we spun that up also in a weekend to help to help restaurants survive. And we’re selling gift cards on help Main Street today, we don’t take any of the money, we just pass through the gift card provider, but we’re a directory of all the restaurants and accordingly their gift cards. So those are some examples of stuff that you know, I think everybody should be doing, spending a little bit of their time on making the world better. And at least I’m trying to pay it forward to the great opportunities this country has, has afforded me and my family.
41:38
Love it, love it. Don’t hear those, those stories too often on this show. So, you know, applaud you for doing it. And we’ll have to reconnect in 10 years, Nihal, and get the report and fun five, and also the 10th year the 100k Pledge, see how many people are shamed and how many people follow through.
41:57
Yep, we will be there.
42:01
Okay, now Nihal, this next question is called three data points. I’m going to give you a hypothetical situation with a startup. And you can ask three questions for three specific data points in order to make your decision. Now, let’s say your approach to invest in a seed marketplace, startup seed stage marketplace, companies based in New York City, the sector is it and network ops, they launched 12 months ago. And they currently have 250k per month in GMV. Again, the catches, you can only ask three questions for three specific data points, what three questions do you ask?
42:35
What’s the name of the company?
42:37
Okay. So you can look it up?
42:41
I can look it up. So I can get more information with just one question. What is the margin on the 250? K? GMV. That’s important to us. Because, you know, we’re software investors, we like high margin SAS businesses, to take rates like 5% 10%, less interesting than 80%. But because they lead with GMV, my feeling is is probably lower margin. Next question should actually be my first question is tell me about the team. You know, what’s their background? What’s their experience? Or their serial founders? How long have they known each other? So double clicking on the team? And then the third question, which is probably analysis we can do on our own is how big is the market that you’re going after? But you know, most of our decisions that seem really the majority of them, and the greatest weight is on team. Because like we know very well, firsthand. Businesses are a roller coaster, you never end up with a business plan you started with. There’s a million pivots in between, it’s about resilience and grit. And if the team can do it and persist, then, you know, you bet on the you bet on the jockey. And so that’s it. It’s all about the team.
43:58
Now, if we could feature anyone on the show, who do you think we should interview and what topic would you like to hear them speak about?
44:05
That is a very good question. You know, I think there’s a my inspiration, and don’t mean to be cheesy. But my wife, and you know, I mentioned her a couple of times. She’s an entrepreneur. She started in politics. And in the nonprofit world, people probably know her from her founding of Girls Who Code and now fighting for moms, with the Marshall Plan for moms and somebody that’s just constantly basically translating the energy of like civilization and trying to focus it into into actions, you know, like, kinda like 100k Pledge helped me shoot but on the macro civilization humanitarian level, where it’s like you’re taking in so many inputs and you’re trying to translate it into something that actually can can change the world. very tangibly, and I’ve never met anybody on earth that can do that. And that’s like the ultimate founder. You know, doing the impossible but taking in all these inputs from such a millions of people and millions of people in pain and agony and actually enacting change to help them. So anyway. I’m sure I can get her to do it. I know people that know her people.
45:25
Just to finish up here Nihal. What’s the best way for listeners to connect with you? And follow along with Eniac?
45:32
Yeah, we’re pretty active on Twitter. Unfortunately, probably too active. But that is the best way. For sure. I’m just at Nihalmehta, N I H A L M E H T A. Then you can find Eniac, at Eniacvc.
45:47
Nihal, It was it was a huge pleasure to talk with you today. Appreciate the transparency and happy to be a part of the Rolodex now. So thank you so much for the time.
45:55
Oh, thank you. This has been great.
Transcribed by https://otter.ai
